Cherry Hills Village businessman indicted for securities fraud
DENVER — A Colorado State Grand Jury has indicted Gary Jule Dragul, 55, of Cherry Hills Village on nine counts of securities fraud. The case was presented by prosecutors from the Colorado Attorney General’s Office following an investigation into Dragul’s business practices by the Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA). The allegations in the indictment provide that Dragul (who has never held a securities license in Colorado) through his company, GDA Real Estate Services, LLC, engaged in a course of business designed to defraud investors. This took place in 2013, when he allegedly failed to disclose to these investors the actual financial condition and substantial debt of GDA, the numerous civil lawsuits filed against them, and that investor funds were used to pay for his personal expenses, including the use of a private jet for travel.
“Protecting consumers is a major priority for my office,” said Attorney General Coffman. “I strongly encourage Colorado investors to do their due diligence prior to making any investment.”
Starting in 2007, Defendant Dragul is alleged to have solicited and issued promissory notes to support his business, GDA Real Estate Services, which used investor money to purchase and manage commercial real estate ventures, including commercial shopping centers. Between 2007 and 2008 Dragul raised significant capital, but his failure to pay investors according to terms resulted in multiple lawsuits, and unpaid funds totaling more than $4 million. The indictment alleges that before starting to solicit investors again in 2013, Dragul’s company showed an outstanding debt reflecting negative equity of over $8.7 million and a cash deficit of almost $300,000.
When soliciting new investors in 2013, Dragul failed to disclose his outstanding debts or the civil suits from former investors. In addition, the allegations state that Dragul misappropriated investor funds for personal use by diverting substantial amounts of money to accounts held personally by him and his wife. It is alleged that among other things, investor money was used for payments to Las Vegas casinos, credit card companies, liquor stores, and for travel on a private jet. These omitted facts, plus continuing to fail to disclose these facts, induced investors to maintain their investments with him, and to make subsequent investment, constituting the alleged violations of the anti-fraud provisions of the Colorado Securities Act.
Please note: The charges listed in this document are merely allegations. The Defendant is considered innocent until and unless proven guilty in a court of law.